HARARE – Zimbabwe hospitality giant Rainbow Tourism Group (RTG) has now returned to profit after years in the doldrums.
In his address to analysts on Wednesday, RTG Chief Executive Officer Tendai Madziwanyika said he was happy that the group’s performance was in line with several of its key objectives set as strategic pillars for the successful turnaround of the company from a loss position to profit position at the beginning of the year.
“The first strategy adopted focused on restructuring the balance sheet. This resulted in the company successfully converting its short term debt to long term debt from a $10million loan facility. The group also successfully conducted a rights issue, raising $4, 5 million which went towards debt restructuring,” said Madziwanyika, recruited late last year to turnaround the group.
“Stopping the bleeding through cost reduction was the second strategy adopted. The company had to change the way it conducted its business. Cost reduction was the first line item to respond positively to all the measures adopted. The result was a reduction in costs by 12% which was a $1, 6 million reduction. However it is important to note that implementation of all cost reduction initiatives was done in accordance with global performance indices and does not in any way compromise on service and quality,” he said.
The Zimbabwe Stock Exchange (ZSE)-listed hospitality group registered a 982% percent increase in earnings before interest and tax, depreciation and amortization (EBITDA) from US$152,000 for the same period in 2012 to US$1,644 million in 2013. Again, this herculean achievement was a result cost reduction initiatives implemented.
The group – in the quarter under review – increased its revenue generation capacity. Several promotional packages where launched in the market and of significance was the successful launching of the RTG Virtual platform, said a company statement.
On this Platform, RTG is able to book hotels around Zimbabwe on behalf of partner hotels. This platform positioned RTG as the largest hospitality grouping in the country with 20 hotels comprising of 7 Rainbow hotels and 13 Virtual partner hotels.
“This is surely set to increase the customer’s choice of hotels in the four corners of Zimbabwe. RTG has set up a convenient booking system through its central reservations office located at the Rainbow Towers Hotel and Conference Centre in Harare,” said Madzivanyika.
Revenues increased by 4% from $12, 7 million in 2012 to $13,2million in 2013 whilst occupancy increased by 10% from 39% in 2012 to 43% in 2013.
The group also reported a 17 % increase in market share from 23% in 2012 to 27% in 2013 against a fair share of 25%. The remodeling of the commercial department to include a centralized sales team, increased channel management through e-commerce and the introduction of promotional and proprietary programs over the past six months contributed immensely to the increase in revenues and occupancies by the Group.
RTG is now benefiting from the impact of the restructuring of the commercial department albeit a soft performance at the beginning of the year. This restructuring was a base for future positive performance. As evidence of the momentum gained, it recorded that:
- The Rainbow Towers Hotel had the highest occupancy of 76% in May 2013.
- Bulawayo Rainbow Hotel had a record trade fair performance in May of $600 000, a 30% increase from same period last year.
- RTG recorded highest revenue in any one month since dollarization of $2,935 million in July 2013.
- Victoria Falls Rainbow Hotel revenues grew by 135% in the month of July compared to the same month in prior year.
- A’Zambezi River lodge revenues grew by 74% in the same month.
- Overall, the Vic Falls properties revenues grew by 100% in the month of July compared to prior year and.
“Taking from a quote by Vivian Green “Life isn’t about waiting for the storm to pass … It’s about learning to dance in the rain,” said Madziwanyika Net assets for the Group increased to $ 15,85million from $13, 7 million whilst the debt burden decreased from $23, 34 million to $21, 09 million. The group managed to restructure most of its debt from short term to long term with an average interest cost of 11% down from 24%. This is set to further reduce to 7% by end of year while it targets to reduce its overall debt.